July 11, 2008
Not In Our Name: The Debate on Trademark Bidding Endures

In the wacky world of marketing, much of what matters lies within public opinion. Enormous sums and countless hours are spent by corporations high and low to gain your dollar (and favor), and ultimately it is consumers who determine the fate of the latest trend, whether a luxury sedan, vacation spot, or piece of technology. Add to the mix the widespread use of the Internet, Google as part of the mainstream lexicon, and the buzz surrounding social search, and it is more important than ever for brands to positively influence consumers.

The power of word-of-mouth has brands scrambling to ‘find themselves’

Consider a familiar scenario: you see a movie you love. Afterward, you share a glowing review with a few friends over dinner. Your friends tell their friends, who tell their coworkers, and so on. In today’s world, however, people are likely to share the same review online, by posting their thoughts on a social networking site like Facebook or Linked In, for their entire network to see. In the case of a positive review, sharing one’s opinion helps the brand. It creates excitement around the release, gives a valuable, albeit fleeting, credibility to the filmmakers, and, may even inspire several people in one’s network to go online, buy a ticket (or several), and head to the theater.

The scenarios are a dime-a-dozen. The concept is simple. With the growing consumer reliance on word-of-mouth to make purchase decisions, and more people looking online for cues on everything from career to style, brands are going to battle to craft an image, and paying great attention to how they are seen online, often taking steps to limit and control the avenues available to consumers interested in their wares. Likewise, with more global advertising dollars being spent online, and increasing competition from global manufacturers hawking everything from food to clothes to flat-screen TVs, branding professionals are fine-tuning their approach, and doing everything they can to build a strong relationship with consumers, and their wallets. In the end, the goal is the same – the identification of a brand’s DNA – the unique set of characteristics that give it personality, and the consumer benefits it offers that make its products or services a preferable choice over the competition.

Amidst the corporate contest, affiliate marketers are helping brands compete in a saturated market, boosting sales, building brand recognition, and raking in profits. Affiliates design engaging websites, employ little-known psychological tactics to convert visitors into sales, and grab commissions from parent companies who own the products being sold.

All of this is standard issue, but a big part of the affiliate puzzle is getting traffic to one’s site. Bidding on a parent company’s trademarked name is one way to ensure interested consumers arrive. Bid on trademarks, the consumer gets what they want, and everyone makes a dime. Simple.

Many brands see things differently, however, and the longtime debate on trademark bidding endures.

The argument against trademark bidding

On one hand, a brand is a business. In theory, the corporation responsible for manufacturing a product or selling a service will welcome a sale, whether generated inside a retail store, from the brand’s website, or from the website of an online affiliate. At the same time, consumers rely on keyword searches to find what they need, and a trademarked name is often a brand’s most recognizable symbol, leaving many brand managers weary of aggressive affiliate tactics.

Brand and reputation management are ample concerns; at the heart of the matter, many brands worry they are at risk of dilution, due to marketing efforts that stray from a core, internally managed, vision. While brand management at the expense of additional sales, especially in a competitive market, may sound strange, brand managers maintain protecting the brand will have a more favorable long-term effect on the bottom line.

“Branding refers to the sum total of activities employed to shape public perception,” explains Rosen, “the total customer experience that ultimately influences how a person feels when they hear a product or company name. Branding is elusive and intangible. It is also the most concrete component of any marketing mix. Lack of control in this arena is like playing eenie-meenie-miney-moe with day trading, and hoping for the best.”

For these reasons and a slew of related others, countless brands have banned affiliate marketers from bidding on their trademarks, arguing such tactics undermine the brand’s efforts to position itself in the minds and wallets of consumers.

But is there more to it? Affiliates say ‘yes.’

The argument for trademark bidding

While many brand managers fear affiliates bidding on their company names may direct consumers to sites with inappropriate content, or messaging not in line with the brand’s core concepts, many affiliate marketers feel trademark bidding is key to driving consumer interest.

Specifically, many affiliates point to the vast level of competition online as perfect reasoning for trademark bidding. Scott Elling, Director of Performance Marketing at Wpromote, poses the following question to skeptical brands:

“Would you rather users click affiliate ads after having searched your trademark, or, that users search your trademark and visit a competitor’s site that shows up in the same page of results? It’s your choice. Allowing affiliates to bid on your trademark gives you the upper hand. We’re all on the same team. Why not work together?”

Some parent companies are more flexible than others. Some have creative departments with the manpower to execute an affiliate creative approval process. Still, for every one who is flexible, there are numerous others who are uninterested in compromising, lacking the resources necessary to traffic affiliate creative internally for approval, or, simply too large (and with too much red tape) for most affiliates to navigate.

Are said brands losing out due to inflexible modes of thinking? Wpromote CEO, Mike Mothner, weighs in:

“I think this is a question of online-driven revenue,” says Mothner, “not brand dilution. When we sell HP laptops as an affiliate of Hewlett-Packard, for example, through search advertising related to ‘HP,’ it has no effect on the brand, only a potentially cannibalistic effect on HP’s internal search marketing efforts, and I would argue this is far outweighed by the value of us driving Hewlett-Packard sales, which could easily be lost to a competitor like Best Buy or Dell. The other way I think about it is you may have billions invested in your brand, but when people search ‘HP laptops,’ there are 20 potential results on Google’s first page for users to click, and only 2-3 that Hewlett-Packard controls. The more Hewlett-Packard can do to dominate key real estate, the better. ‘Brand dilution,’ if any, already occurred, simply because there are those 20 results.”

The bottom line

So, who is right? That is a matter technically up for discussion, and, in some cases, legislation, as the debate between brands and affiliates persists. Some affiliates feel concerns regarding brand dilution should be addressed by giving parent companies final approval on affiliate creative, and, theoretically, if brands and affiliates work together, there is no reason an affiliate site should ever stray from a brand’s core objectives. In fact, with online affiliates’ built-in emphasis on performance, affiliate sites fashioned under brand managers’ watchful eyes have a good chance of outperforming those created by parent companies themselves. Unfortunately, many parent companies are not looking to compromise.

In the end, although the proverbial writing may very well be on the wall, it seems we are no closer to a solution. As consumers gain more of the upper hand, however, simply due in part to the sheer number of options they have when it comes time to shop, it may not be long before brands begin to loosen their grip on trademarks, if only to keep consumers engaged.